VANCOUVER — A proposed class action lawsuit against the owners of Vancouver’s most notorious single-resident occupancy hotels suffered a setback Thursday, as the B.C. Court of Appeal ruled that the case could not proceed as proposed.

The court granted an appeal made by the Sahota family, ruling that the Residential Tenancy Act dispute cannot be brought forward as a class-action proceeding.

Immediately after the ruling was handed down, Jason Gratl, the lawyer for the plaintiff Jack Gates, said he would seek instructions from his client on whether to seek leave to appeal to the Supreme Court of Canada.

The suit, believed to be the first of its kind, could have major implications for groups of tenants trying to resolve grievances against landlords of hotels.

The legal action was started in the summer of 2016 by Gates, a resident of the Regent Hotel, a single-room-occupancy facility in the Downtown Eastside described by city officials as one of the worst buildings of its kind in Vancouver.

Members of Vancouver’s Sahota family and their companies, who own the Regent and other single-room-occupancy buildings as part of a $130-million real estate empire, are named as defendants.

The lawsuit, filed in August 2016, seeks punitive and aggravated damages, an injunction ordering repair work on the building, and an order “appointing, in place of the Sahotas, a suitable property management company” to run the building, which, the lawsuit alleges, has “serious health and safety issues.”

The Sahotas’ lawyer had argued B.C. Supreme Court was not the appropriate place for such a case. Michael Katzalay said a potential suit could be a floodgate issue.

He argued such disputes belonged before the Residential Tenancy Branch.